Is there any point now in fixed rate savings?

fatbob10

Just a thought I've been having of late. Personally I can't see any point fixing savings for 1, 2 or whatever years now. So far as I can see i think we will see top rate variable savings accounts paying around 3% gross with instant access so why bother fixing rates anymore on fixed term deals! It seems widely thought the Bank of England will leave rates as they are for a while now - well they cant go down much more can they!

The only way rates can go now is up so if you were on a fixed rate deal for say a year or 2 you wouldnt benefit from any movement upwards in the interest rate which is pretty much the only way it can go now.

So for me I think its instant access variable accounts from now on . Anyone else got any thoughts?

Baz_2

Yes an equivalent BoE tracker would be the way to go now for long term savings.

i.e a BoE + 1.89% savings rate would look great in a few years when the rate is back up at 5%.

Not sure they exist though. Do they?

rb10

Doesn't have to be instant access variable, you can sometimes get slightly better rates on instant access fixed accounts.

john_s_2

This all boils down to the hoary old chestnut of inflation, much debated on this board!

To repeat points others have made, 6% interest in a year's time might sound great now, but if inflation is running at 10% it won't sound so great. OTOH, if you're getting 3% interest but inflation is running at -2%, then that will be fantastic.

But you don't know how good a one year fixed rate is until the end of the year when you can compare it to inflation.

And then, of course, which measure of inflation do you use, etc etc.

FWIW I transferred my cash ISA to a one year fixed rate @ 3% the other day. Savings rates might shoot up over the next 12 months - it's a risk I'm prepared to take.

Energize

I think NS&I offer tax free RPI and BR linked accounts.

john_s_2

I meant to say in my earlier post, savings rates, mortgage rates, and the BoE rates have diverged somewhat over the last six months. Sure savings (and mortgage) rates have come down, but not by as much as the BoE rate (not all of them).

So if and when the BoE rate goes back up, there's no saying that savings (and mortgage) rates will follow suit. The rule book's gone out the window for the time being.